1st LD Writethru: Oil prices drop on profit-taking, stronger dollar

Oil prices dropped Friday as traders took profit of the previous day's gains and the U.S. dollar strengthened on Federal Reserve Chair Janet Yellen's remarks.

Oil prices jumped in the previous session as government data showed U.S. inventories dropped last week, the third weekly fall in crude supplies.

U.S. crude supplies of last week decreased 2.7 million barrels to 482.2 million, 90.9 million barrels more than a year earlier, said Energy Information Administration on Wednesday in its weekly report. U.S. crude production retreated 112,000 barrels to 9.262 million barrels a day.

Meanwhile, oil came under future pressure after the U.S. dollar soared against other major currencies on Friday as Federal Reserve Chair Janet Yellen said she expected the Fed to raise interest rates this year if the economy remains on track for her forecasts.

"If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target" and start to normalize monetary policy gradually, she said.

A stronger greenback made the dollar-priced crude more expensive and less attractive for buyers holding other currencies.

The U.S. benchmark, West Texas Intermediate for July delivery, moved down 1 U.S. dollars to settle at 59.72 dollars a barrel on the New York Mercantile Exchange. In London, Brent North Sea crude for July delivery, the global benchmark, lost 1.17 dollars to close at 65.37 dollars a barrel. Endite